Economic Effects

One can compute the implicit shadow prices for the policy variables, I, T, F and TR (traits). These are evaluated as impacts on farm revenue.

The PHYVRICE equation clearly shows that traits affect the adoption of modern rice varieties and that they drive MV expansion beyond the original first generation levels. The three variables AGRQUAL, ABIOSTRESS and DISINS increased PHYVRICE by 27% over first generation levels. An increase in NLR of 2 also increased PHYVRICE by 6-7%. Thus we can conclude that the addition of these traits probably expanded PHYVRICE by roughly one-third, i.e. from 40% of area to 60% of area by 1984. By 1995 this has increased further to 75%.

The effects of traits on average yields is negligible when the negative NLR coefficient is considered.

Thus, we can approximate the value of third and fourth generation traits as an expansion of modern rice area of 15-20% times the yield effect of PHYVRICE. This indicates a yield increase of roughly one ton per hectare (a 65% increase).

MVs also increased input use per hectare by about 10%, so the net productivity increase was probably in the order of 50%. The trait values associated with third and fourth generation breeding then added 8-10% to national agricultural income. This estimate is roughly double the Gollin-Evenson estimate based on yield effects only (Chapter 9).

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